What was the amount of revenue recognized during the 2024 period related to deferred franchise and development fees for Buona?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
bilities are included in deferred revenue and deposits – training fees on the balance sheets. Accounts receivable and contract liabilities were as follows for the fiscal years ended:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Accounts Receivable | $ - | $ - | $ - |
| Contract Liabilities | $ 329,866 | $ 252,917 | $ 72,417 |
NOTE 4 – CONTRACT BALANCES (CONTINUED):
Changes in deferred franchise fees and deferred development fees in 2024 and 2023 were as fo
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the revenue recognized during the 2024 period related to deferred franchise and development fees was ($13,051). This figure represents a reduction in the deferred revenue balance as Buona recognizes revenue from franchise and development fees over time as it fulfills its obligations to franchisees.
Deferred revenue typically arises when Buona receives payments for services or rights that it will provide in the future, such as initial franchise fees or area development fees. These fees are not recognized as revenue immediately but are instead deferred and recognized over the period that Buona provides the associated services or rights. For instance, area development fees are considered deferred revenue until the franchisee executes franchise agreements or the execution date in the Area Development Agreement (ADA) passes. If new franchise agreements are signed within the development schedule, the ADA fees are amortized over the term of the new franchise agreement. If the deadline passes, the ADA fees are recognized as non-refundable revenue.
The table in Item 22 provides a summary of the changes in deferred franchise and development fees during 2024, showing the beginning balance, revenue recognized, new deferrals, and the ending balance. For a prospective franchisee, this information offers insight into how Buona accounts for franchise and development fees and how these fees contribute to the company's revenue over time. Understanding the amortization schedule and conditions for recognizing deferred revenue can help franchisees anticipate the financial implications of their agreements with Buona.